Mortgage News by Yvonne Claro

Because humans are involved in recording deed transfers and plotting land parcels, a lot can go wrong. You want title insurance because it will protect you against defects and human error.

Property Searches and Public Records

• Property transfers were first recorded alphabetically in separate Grantor and Grantee books.
• The books are heavy to lift and dusty.
• County records are often maintained at local courthouses or the Clerk of Registrars.
• Today, most records are stored on the computer.

Division of Land

• Early deeds involved large chunks of land known as Townships.
• Townships contain 36 sections and are six miles by six miles.
• Sections measure one mile by one mile and contain 640 acres.
• Half of a section is 320 acres.
• 1/4 of a section is 160 acres.
• 1/4 section of 1/4 section is 40 acres.
• An acre is 43,560 square feet

Title Search Basics

• Title searches start with the most recent deed, searching the grantee's name (the person now holding title) backwards in time, until the deed when the grantee acquired the property is located.
• That grantor's name is then searched backwards in time in the grantee's book to find when the grantor acquired title as a grantee.
• This process continues, and over time, the property description involves larger and larger parcels of land.
• Eventually, the searcher finds the U. S. Patent.

Other Factors Affecting Title

Deeds establish chain-of-title, but sometimes those chains are broken. In addition, title searchers also look for reconveyances (proof that the encumbrances are paid off), and they look for easements, rights-of-way, CC&Rs, other elements affecting title to the property. Here are more records that are searched to piece title together:

• Marriage records
• Death certificates
• Tax sales

Title Insurance Coverage

Depending on the title company, consumers can choose among a variety of options, but the top three choices are Owners, Lender's and Extended Coverage.

• Basic Owner's Title Policy Coverage:

1. Clear title to the property
2. Incorrect signatures on documents
3. Forgery, fraud
4. Defective recordation
5. Restrictive covenants
6. Encumbrances or judgments

• Basic Lender's Title Policy Coverage:

1. Mechanic's liens and unrecorded liens
2. Unrecorded easements and access rights
3. Defects and other unrecorded documents

• Extended Owner's Coverage

1. Building permit violations from previous owners
2. Subdivision maps
3. Covenant violations from previous owners
4. Living trusts
5. Structure damage from mineral extractions
6. Variety of encroachments and forgeries after title insurance is issued

Who Pays For Title Policy Insurance?

• This depends on your local custom.
• It can differ from county to county, but it is also negotiable in the purchase offer.
• Sometimes sellers and buyers split the fee for the owner's policy.
• Typically, the buyer pays for the lender's coverage.

How Long Are Title Policies Good For?

Forever, theoretically. If you are planning to resell the property within a couple years, ask your title company about "binder" coverage. Most companies will sell you a binder policy for 10% more. A binder is good for two years, often can be extended beyond that time, and the fee charged for the new buyer's policy will be the difference between what you bought the property for and the price at which it sold. In other words, you will get a credit for the amount of coverage you purchased under your own Owner's Title policy.

How Often Are Title Policy Insurance Premiums Paid?

Once. The fee is due when you buy. You will never pay it again. Title policy insurance is the best insurance policy you can ever buy.

Yvonne Claro,  your mortgage specialist can be reached direct at 727-565-9361.

Tips on Buying Foreclosure and Pre-foreclosure Property

If you are someone who wants to purchase real estate at a great discount for investment or personal use and don’t know how the system works keep reading. Even if you think you know how to buy pre-foreclosure and foreclosed homes (REOs) keep reading!

Chances are, even if you have been in the market for a while, you have seen or heard of how differently each property is being handled. Let’s cover a couple of prime differences between the two situations:

Pre-foreclosures

1. Pricing – If the property is over-leveraged, or even if it isn’t, the price will likely be somewhere below the ‘market value’ to attract buyers, but may just be a shiny wrapper on an empty package

· Due to the fact that most people are not paying full price for real estate these days, even homeowners who aren’t behind on their payments or owe more than their house is worth, are just trying to ‘get out’ and will attempt a “short-sale” just to sell the house. This may or may not work. Proceed with caution.

· In the case that the property is grossly over financed, the listing price may be an acceptable short-sale payoff amount to the mortgagor, or it may not. Be cautious when putting in an offer on a property because the asking price has most likely not been approved by the lender, who has complete control over the sale.

· In some cases the listing agent may not know how to discount the home to a value close to what will be accepted by the lender; and the price will be higher than what you should pay for the property. – If you know what you’re doing, this can be a great way to find a bargain while avoiding a lot of the competition from other ‘bargain hunters’.

1. Timing - Many times you can be held up for months before getting an answer from the lender on a short-sale/pre-foreclosure situation; potentially missing out on other opportunities that may come along. To prevent this from happening to you, ask a couple of relevant questions before submitting an offer.

· Have you begun working with the bank on the short-sale? (every person will handle this differently, so get as much info as you can)

· Do you have any idea of when the lender will be giving approval on the short-sale amount?

· How did you arrive at the listing price? (reverting back to the last point, this is a very important question to ask whenever working on a pre-foreclosure property)

REOs (Real Estate Owned) or Foreclosure Property

1. Pricing – The list price is a number the lender will accept; however, in rare situations the listing agent may actually convince the lender to under-price the property and the actual sales price may be higher because of a bidding war – Yes! A bidding war in this market! (this can also happen with a short-sale property, although much less common)

1. Timing – Even though you are still dealing with the bank, at this point they have come to the realization that they’re not getting their money back and need to get the property ‘off the books’ as soon as possible. Expect a new found sense of urgency when dealing with REOs/foreclosure properties. Cash, and a quick closing, are King of this domain.

Yvonne Claro is an experienced real estate investor and loan originator, who can guide you in determining the best mortgage financing for your personal financial needs and home. Call Yvonne Claro at 727-565-9361 direct. 

A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?

Answer: Mortgagee Letter 00-05, page 21, paragraph F, "Allowable Provisions" states: "All or a portion of the PITI arrearage (principle, interest, Taxes and Insurance) may be capitalized to the mortgage balance. Foreclosure costs, late fees and other administrative expenses may not be capitalized.

Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?

Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the borrower's continued ability to support the modified mortgage payment.

Question 3: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner's Association fees?

Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.

Question 4: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?

Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.

Question 5: When an asset is modified is the homeowner eligible for the upfront premium refund at payoff of the loan?

Answer: It depends upon when the closing date occurred. For assets closed:

After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,

On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or

On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.

Question 6: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.

 Call Yvonne Claro 727-565-9361 if you need assistance with your loan modification.

A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?

Answer: Mortgagee Letter 00-05, page 21, paragraph F, "Allowable Provisions" states: "All or a portion of the PITI arrearage (principle, interest, Taxes and Insurance) may be capitalized to the mortgage balance. Foreclosure costs, late fees and other administrative expenses may not be capitalized.

Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?

Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the borrower's continued ability to support the modified mortgage payment.

Question 3: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner's Association fees?

Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.

Question 4: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?

Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.

Question 5: When an asset is modified is the homeowner eligible for the upfront premium refund at payoff of the loan?

Answer: It depends upon when the closing date occurred. For assets closed:

After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,

On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or

On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.

Question 6: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.

 Call Yvonne Claro 727-565-9361 if you need assistance with your loan modification.

    Commercial Lending! If the bank turned you down call us!  We have over 100 lenders nationwide who want to fund your business!

Call Yvonne Claro, Loan Specialist 727-565-9361

Home Mortgage Experts, Inc & Commercial Capital LTD

FHA loans began to lose favor in the late 1990s, when home values began to inch upwards, surpassing FHA mortgage limits, and sellers balked at FHA's stringent appraisal guidelines.

How FHA Loans Work
Now, FHA does not make loans or guarantee loans. It insures loans. The insurance removes or minimizes the default risk lenders face when buyers put down less than 20 percent. Without further approval from FHA, its approved lenders are authorized to:

• Take loan applications
  
• Process loan applications
  
• Underwrite and close the loan

FHA Increases Mortgage Limits
My parents bought our first home in 1955 for $9,000 with an FHA loan. It's almost inconceivable to think of a home costing that today. As a result, FHA periodically increases its mortgage limits. As of July, 2006, mortgage limits ranged from:

• $362,790 for high-cost areas
  
• $200,160 for low-cost areas
  
• $544,185 in Alaska, Guam, Hawaii and the Virgin Islands
• By March of 2008, that limit was bumped to a minimum of $417,000 or 125% of median sales price, whichever is greater, with a top end of $729,750

Blemished Credit History
If your credit is less than perfect, FHA might be the loan for you. You may qualify for an FHA loan even though you have had financial problems.

• Fico Scores can be lower than those for a conventional loan.
  
• Bankruptcy. You can obtain an FHA loan two to three years from the date of your bankruptcy discharge, as long as you've maintained good credit since your debts were discharged.
  
• Foreclosure. If you keep your credit in excellent shape since a foreclosure, an FHA loan will be available to you two to three years from the final date of your foreclosure.

Competitive Rates & Terms
Today's terms are pretty straightforward. In fact, in many markets the rates and terms are better than those for 80% / 20% piggy back loans.

• There is little or no adjustment to the interest rate for an FHA loan, as the rates vary within .125 percent of a conventional loan.
  
• Mortgage insurance is funded into the loan, meaning a premium of 1.5% is added to the loan balance instead of being paid out-of-pocket. In addition, a small portion for the mortgage insurance premium is added to the monthly payment, but it is far less than private mortgage insurance premiums.
• Borrowers can finance 97% of the purchase price and put down 3 percent. In some instances, when combined with other types of loans, the down payment can be zero.
• Allowable debt ratios are higher than the debt-ratio limits imposed for conventional loans.

Fewer Required Repairs
At one point, FHA repair demands were so excessive that sellers would discount the list price to buyers who would agree to obtain conventional loans over FHA loans. Today the requirements appear more reasonable.

• Defective roofs that leak still need to be replaced but an older roof does not necessitate replacement if it doesn't leak.
• Windows that stick upon opening or have cracked panes do not require replacement.
• FHA appraisals do not take the place of a home inspection, never have. Buyers should still obtain a professional home inspection.

FHA loans are available to anybody but are used most often by first-time home buyers and low- to moderate-income buyers. However, there are no income limit qualifications.

Call me today to see if you qualify for a FHA loan. Yvonne Claro, Your Mortgage Specialist 888-852-3678.

Refinance To Build Equity Faster

Many borrowers use a refinance to shorten the term of the mortgage. And brace yourself, even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.

Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Jim. "When we retire, we can scale down and take equity out of the house."

If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.

Let me assist you with building equity faster!  Yvonne Claro, Your Mortgage Specialist 888-852-3678.

The first step in buying a home is to figure out how much you can afford.  This is important for obvious reasons but also because it is a huge disappointment to fall in love with a home only to realize later that you can't afford to buy it.  Affordability depends on your income, credit score, monthly expenses, and interest rate.  You'll want to consider any potential changes in monthly expenses, too.  If you are about to sign up for some college classes, add a new car payment, or start spending money regularly on another item, you will want to include that in your calculations.

Call to get pre-qualified for a new home. Visit mortgage calculators on this site, or call Yvonne Claro, Your Mortgage Specialist 888-852-3678.

The first step in buying a home is to figure out how much you can afford.  This is important for obvious reasons but also because it is a huge disappointment to fall in love with a home only to realize later that you can't afford to buy it.  Affordability depends on your income, credit score, monthly expenses, and interest rate.  You'll want to consider any potential changes in monthly expenses, too.  If you are about to sign up for some college classes, add a new car payment, or start spending money regularly on another item, you will want to include that in your calculations.

Yvonne Claro, Your Mortgage Specialist 888-852-3678.

We now have products at 95% LTV with NO MI.

No MI, and everyone knows we charge no processing fees, application fees, or admin fees.

Email us for a rate quote!

Yvonne Claro, Your Mortgage Specialist 888-852-3678.